Report: State Budget Outlook Mostly Solid

State revenues remain stable for the most part, but in a few places, collections in individual tax categories are not living up to expectations, according to the latest survey of state fiscal offices by the National Conference of State Legislatures.

All 50 states provided information for the conferences November 2006 “State Budget Update,” but only 48 had revenue performance through the first quarter of the fiscal year available. In 23 states, revenue collections are above forecast, while 22 reported on-target revenues and three said that they were below estimates. A year ago, 42 states reported bringing in more money than expected.

While personal and corporate income tax collections are stable or above forecast in most states, NCSL's survey shows an increase in the number of states seeing trouble in sales tax collections. Fourteen states report underperforming sales tax revenue, compared with seven at this time last year.

The survey also asked state budget officers to name the top fiscal issues that they expect their state legislatures to grapple with in crafting budgets for the 2008 fiscal year. In at least 29 states, education issues will dominate legislative discussions and in at least 23 states, health care and Medicaid are at or near the top of the list. Tax policy will be a major topic in at least 16 states, where legislators will debate property tax relief and tax reform plans. In 10 states, transportation or other infrastructure funding will be a big issue.

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